A federal appeals court has overturned a $164.5 million judgment that favored Calumet Farm owner Henryk de Kwiatkowski.
A verdict handed down in May 2000 ordered Bear Stearns to pay the airline leasing and sales executive as punishment for failing to notify him adequately about the risks of investing in foreign currency. De Kwiatkowski bought $6.5 billion in foreign currency futures in 1994 and lost $300 million in the deal.
A 55-page opinion issued Sept. 19 by the U.S. Court of Appeals for the Second Circuit, however, concluded there was insufficient evidence that Bear Stearns had been negligent, according to the Associated Press. The three-judge panel also noted that de Kwiatkowski was an experienced investor who understood the risks. According to court records, he suffered a $112 million loss in one day during December 1995.
During the trail, de Kwiatkowski had asserted that Bear Stearns failed to keep him apprised of market forecasts and gave negligent advice regarding the timing of his trades.
The Associated Press reported that several Wall Street trading groups filed briefs urging the appeals court to overturn the verdict. A brief filed by the Bond Market Association said if the verdict was upheld every disgruntled investor "will want juries to second-guess every good-faith action of financial institutions and seek reimbursement for every losing trade."
Myron Kirschbaum, attorney for de Kwiatkowski, could not be reached for comment. Bear Stearns did not comment on the verdict.